Wednesday, March 14, 2012

Michigan: Most Improved Economy Since 2010

The chart above shows the monthly difference between the Michigan jobless rate and the national unemployment rate from January 2002 to January 2012. In January, the monthly difference dropped to 0.70% as Michigan's jobless rate fell to 9% (lowest since September 2008) compared to the national rate of 8.3%. That's the lowest Michigan-U.S. jobless rate spread since December of 2002, slightly more than nine years ago (see chart).

Over the last year from January 2011 to January 2012, Michigan's jobless rate has dropped by 1.9%, from 10.9% to 9%, which was the largest 12-month decrease among all of the U.S. states over that period. And Michigan has gone from having the highest state jobless rate, or being among the top three states for most of the 2007-2009 recession, down to a rank of #40 out of #51 states and the District of Columbia in January.

I nominate Michigan as the most improved state economy since the recession ended.

Does TARP get some credit for allowing the car companies and their suppliers to survive the recession?

I'd agree (or, at least, not refute) that point if it weren't for Ford. Ford was in the same position as Chrysler and GM in 2009, but didn't take a penny of TARP funds and turned themselves around. That makes me wonder what would have happened had GM and Chrysler not received any funds. I'm not so sure a complete shutdown was in the future for these two. Yes, they were in bankruptcy, but that doesn't necessarily mean the end of the company.

look at the wonders a real BK did for the airlines. it's still a terrible, over-regulated biz i'd never want to be in, but note how they all survived the last couple oil price shocks where in the 70's it killed them all.

because the assets were handed out nepotisticly instead of efficiently, we'll be seeing those 2 back in trouble again within the decade and looking for taxpayer bailout 3.0.

i think that whole "supply chain and jobs Armageddon" argument was just a trumped up bugbear to make it seem like the only option.

lots of co's go BK without much effect on operations in the short run. that's what DIP financing is for.

Dig a little deeper in the data and the picture isn't quite so good ... Michigan's labor force shrank by 1% in 2011 (after declining more than 2% in 2010), while employment grew by 1% of the labor force in 2011 (after growing by about 0.8% of the labor force in 2010). So enough jobs are being created to keep up with the average growth of the labor force, while unemployment declines mainly because the current situation incites people to either give up or move away. On the whole, this does represent an improvement of sorts (because the people who move to areas with lower unemployment are likely better off, and there is job growth in the state), but I don't think I would use this state as a model case of improvement.

My vote for "most improved" would be Texas ... according to BLS, employment growth there was among the three best states on a percentage basis over the last year, the other two being North Dakota, which is already in great shape, and Utah, where the labor force also seems to be declining. The Texas labor force grew by 1% last year, while job growth was 2%.